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International Hot Spot

Foreign Investors Discover the Beehive State

By Marcie Young

Utah’s dynamic business climate and prominence as one of the nation’s best places for industry doesn’t get lost in translation when it comes to foreign investment. The statistics, figures and accolades alone speak volumes and highlight what local corporations already know—Utah is a great place to do business.

Alex Nabaum

“We have the finance, the energy, the right operating costs, the workforce and the language capacity. We have everything,” says Spencer P. Eccles, executive director of the Governor’s Office of Economic Development (GOED). “We punch above our weight. It was an audacious weight to set, but we have a long held vision and goal that we will become the best-performing economy in the United States.”
Following that vision, the International Trade and Diplomacy Office—charged with increasing exports, foreign direct investment (FDI) and international trade-related jobs—ratcheted up its efforts to spotlight Utah as the most desirable place in the nation to do international business. “Utah is a global business destination,” says Eccles. “We’re taking international investment to the next level and saying, ‘When you’re making a decision about where to make an investment in the United States, make it in Utah.’”
Much of the state’s past trade activity has been successfully focused on export, with Utah exports increasing by more than 85 percent between 2008 and 2012—compared to the national average of 20 percent. And while exports—and partnerships with the U.S. Commercial Service, World Trade Center Utah, the Small Business Administration and World Trade Association of Utah—remain an important piece of the mission, showcasing Utah as a viable place for international investment has become a major and immediate focus.
“Years ago, the missing element in international trade was other countries coming in and investing in Utah,” says Vincent E. Mikolay, GOED’s managing director of business outreach and international trade. “The goal now is twofold: increased export and increased foreign direct investment as key levers to grow jobs in Utah and put more revenue into the state. If we can build a more prosperous economy, it will create a better standard of living for everyone in the state.”
Mikolay notes that Utah’s exports were estimated at $19 billion in 2012, while foreign investment into the state has been more limited. “We have a lot of opportunity to grow. More than $300 billion comes into the United States each year, and Utah needs to capture more of it,” he says, noting that more and more foreign firms are putting Utah on their shortlists for expansion in the United States. “The top 10 states capture 50 percent of that foreign investment, and there is no reason why Utah can’t take a bigger part.”

High Praise
Ranked at the top of Forbes magazine’s “Best State for Business” list year after year, Utah has built a reputation as a stable and friendly business climate and consistently garners national praise for its low operating costs, strong economic growth and superior governance. What makes Utah stand out as a premier place to do business hasn’t gone unnoticed, with the state drawing accolades from the Pew Center (“Best Managed State in the Nation”), Pollina Corporate Real Estate (No. 1 in the country for business and careers) and Business Facilities (“Best Business Climate”), among dozens of others.
The long list of what Utah offers new and expanding companies, from an educated workforce and infrastructure to transportation and energy, makes the state an ideal match for foreign investors looking to do business in the United States, says Harvey Scott, director of GOED’s International Trade and Diplomacy Office. But the challenge, he notes, lies in educating foreign investors and executives, many of whom have only heard about Utah because of its connection to the 2002 Salt Lake Winter Olympics.
“Utah is an easy place to sell. On paper, it looks great, but when people come to visit is really when we set the hook and reel them in,” Scott says, recalling a visit from a skeptical ambassador who knew nothing of the state and ended his weeklong trip asking about local residential real estate. “The biggest challenge is that foreign investors don’t think of Salt Lake City when they think about opening a facility in the United States. They think Miami, New York City, Chicago and maybe Houston or Dallas, but they don’t think about Utah.”
That’s what the state is trying to change. According to the Bureau of Economic and Business Research at the University of Utah, more than 130 different languages are spoken in Utah businesses daily, and Scott says international business leaders, investors, politicians and ambassadors should see the state’s multilingual capability as an invaluable asset.
That, among the state’s other draws, has made Utah a great place for Fresenius Medical Care, the world’s largest integrated provider of kidney dialysis products and services, says Steve Marler, the company’s senior director of operations. “We’re a global company, and it really came down to competitiveness and what the state offers,” he says of Fresenius, a German company listed on both the New York and Frankfurt stock exchanges.
Fresenius opened in Ogden nearly 20 years ago and has expanded into a 1-million-square-foot manufacturing facility with about 1,700 employees. “Utah has the most to offer overall,” Marler says. “We have a great labor pool that’s well educated, and all of the cost drivers are very stable.” He notes that, as a medical device company, it’s also critical that Fresenius be in an area that supports its industry through higher education, naming Brigham Young University, Utah State University, Weber State University and the University of Utah as pools for recruiting engineers, biologists, chemists and other professionals.

Making the Connection

Quality of life in Utah also ranks high among businesses with foreign ties and can be the driving factor when it comes to opening a new facility or relocating to the state. That’s how the sock knitting company Lin Manufacturing and Design came to North Logan in the early 1990s, says company Vice President Joe Schulte.
Owner Hillary Ong, originally from Taiwan, came to Logan as a student at USU after her father called a friend in the United States to ask about the safest place to send his daughter to college. There she met her husband, Ken Ong, and several years later, they launched Lin Manufacturing from a 200-square-foot office.
Headquartered in Cache Valley, the company has expanded into six factories across three countries with more than 1,000 employees.
In December 2013, Lin announced its Utah expansion through its major subsidiary in China, Zhejiang Walt Technologies—one of the largest sock knitters in the world—and expects to add up to 150 new jobs and invest $4 million in capital to build a new hosiery facility with the potential to manufacture 14,000 dozen socks a week. “Utah has been good to them, and they want to stay here,” Schulte says. “There’s an abundance of hardworking and ethical people, and I think we’ll find the same thing when we expand.”
Creminelli Fine Meats, which began producing its artisan salami in Salt Lake City in 2007, found the partnerships formed with the state and the Economic Development Corporation of Utah (EDCUtah) to be invaluable when chief artisan Cristiano Creminelli and CEO Chris Bowler began looking for a location to launch the brand.
“EDCUtah was able to introduce us to all of the resources in the meat and food industry we needed in that very first phase,” says Bowler, who worked for the state’s Division of Business and Economic Development, GOED’s predecessor, before consulting work took him to Italy. “They had the ability to bring us good data and options of real estate, cost of living and labor, but were also able to connect us to important networks within the state.”
The size of the Utah market and of Salt Lake City, Bowler notes, made starting the business more manageable than other, larger cities with a more expansive food scene. “Sifting through and trying to find those partners in a bigger market was a lot more daunting,” he says of the company, which produces about a million pounds of product each year and ships to just about every major metropolitan area in the country.
For Creminelli, whose family has been producing artisan meats since the 1600s, the Utah landscape was crucial. The climate, he says, is similar to that of his hometown in Italy’s Piedmont region at the foothills of the Alps and lends itself to the production of high-quality, cured meats. “There’s also a lot of little farms, and for the kind of work we do, we want to use natural and organic meats,” he says.

Making Waves

While established businesses with foreign ties expand their footprint in Utah, the state has also drawn a few big wins among international companies in recent months, including Hong Kong-headquartered container shipping and logistics firm OOCL, German medical technology company Ottobock Healthcare and Swedish technology corporation Beijer Electronics.
Such wins demonstrate Utah’s commitment to doing business on a global scale, Scott says, but it hasn’t come without a lot of strategic planning and follow up. “[OOCL] is one of the fruits of our long-term investment in Asia,” Scott says. “We’ve been working with China, Japan, Hong Kong, Malaysia and Singapore for years.”
There’s an abundance of foreign investment dollars ready for the taking, Scott says, and Utah wants to be a first consideration for those investors wanting to do business in the United States. The number of millionaires in Mexico, he notes, increased by 45 percent in 2013, and the country is home to 186,000 millionaires with a combined fortune of $364 billion. “People are looking for safe places to invest their money. Why not Utah?” he says. “One of the things the world recognizes about the United States is that we operate under the rule of law in our business dealings, and there’s no state in the country that better exemplifies that than Utah.”
When it comes to FDI, Scott says, the two countries that seem to attract an inordinate amount of investment are Ireland and Singapore, and those are models that leaders at GOED want to emulate. Both countries have become hubs for FDI, yet have commonalities with Utah, including a multilingual workforce and proximity to larger countries and Utah’s location in the center west of the United States—an important element from a distribution perspective.
“When people think of FDI, they think of Singapore and Ireland. That’s how powerful those countries are,” Scott says. “But you should really think of three. If you’re going to Asia, you think of Singapore, and if you’re going to Europe, you think of Ireland. But if you’re coming to the U.S., you should be thinking of Utah.”
The state’s mission to turn Utah into a top spot for foreign investment is ambitious, Mikolay admits, but after years of laying the groundwork and plotting a bullish strategy, Utah is well positioned to become an international player. “Business development doesn’t happen in a one-off way,” Mikolay emphasizes. “We can’t expect immediate results and have to maintain and improve our relationships. That’s a key component of our strategy and one of the core principles of how we’ll be operating.”

Benefits of U.S. Citizenship:
The EB-5 Visa Investor Program

Created by the Immigration Act of 1990, the EB-5 visa offers foreign nationals who invest money in the United States a method to more easily obtain a green card and accelerate the ability to do business here. The visa is available to those investing at least $1 million in a commercial enterprise—or $500,000 in a targeted employment area, which is rural or has high unemployment—that will benefit the national economy and create at least 10 full-time jobs for U.S. workers.
It’s a benefit that, coupled with everything else Utah has to offer, makes the state an even more desirable place to do business, says Harvey Scott, GOED’s director of international trade and diplomacy. “If you want to buy or create a company, relocate a business or expand a technology, all of that can be done here, and you can get your EB-5 visa,” Scott says. “And in Utah, an investment of $500,000 can go a very long way.”
The visa program offers most of the benefits of U.S. citizenship, including the ability to live anywhere in the country and access to in-state education rates, and applies to the individual investor and family members under the age of 21. Four approved EB-5 visa regional centers are located in Utah, including Utah Regional Investment Fund LLC, Utah High Country Regional Center, Mountain States Center for Foreign Investment and Invest U.S. Regional Center.

A New Mission

Trade missions at the International Trade and Diplomacy office have long been at the heart of pitching corporations, venture capitalists, politicians and technology leaders on why Utah is one of the smartest places for foreign investment. In FY2013, the Governor’s Office of Economic Development led six trade missions to countries including, Thailand, Israel and Brazil as a means to promote the State of Utah, including tourism and Foreign Direct Investment.
Trade missions, says Vincent E. Mikolay, managing director of business outreach and international trade for GOED, offer a cost-effective tool for Utah companies to travel as a delegation and learn more about target markets through briefings, site visits, networking receptions and one-on-one appointments with targeted agents and joint-venture partners. Some trade missions are led by Gov. Gary R. Herbert, while others are headed up by his team in the International Trade and Diplomacy Office. Either way, Mikolay notes, “There is always a component of helping companies in Utah with their export strategy. We facilitate matchmaking with clients and manufactures within that region, allowing them to meet with multiple agencies and businesses over just a few days.”
Now, Mikolay says, GOED has added industry-led trade missions anchored to trade shows in foreign markets. Tapping into six key industry clusters, the state plans to build a strong Utah presence at international shows—spanning from software IT to manufacturing—by exhibiting with several local companies and businesses. “Industry should be out front, and trade should be supporting them,” Mikolay explains of the program. “That leverages industry attendance at the event and creates a more holistic approach, as well as bringing more bang for the buck for everyone involved.”
The first confirmed industry-led trade mission is to Dubai, where the world’s second-largest software IT show, GITEX, is being held in October. Following the show, Utah companies could have the option to travel around the region as part of a more traditional trade mission.